Pope v. Dapray

52 N.E. 58, 176 Ill. 478

Opinion

Mr. Justice Phillips

delivered the opinion of the court:

Plaintiff in error seeks a reversal of the decree of the' circuit court dismissing her bill, alleging as a reason therefor that the promise made by her father to buy in this land for and make conveyance to her after she had secured a divorce, created a constructive trust, which by the Statute of Frauds is expressly excepted from its action. Section 9 of the statute is as follows: “All declarations or creations of trusts or confidences of any lands, tenements or hereditaments shall be manifested and proved by some writing signed by the party who is by law enabled to declare such trust, or by his last will in writing, or else they shall be utterly void and of no effect: Provided, that resulting trusts, or trusts created by construction, implication or operation of law, need not be in writing, and the same may be proved by parol.”

If it be true, as contended, the facts presented show a constructive trust, such may be proved and established by parol. A constructive trust is one that arises where a person clothed with some fiduciary character, by fraud or otherwise gains something for himself. (Perry on Trusts, sec. 27; Reed v. Reed, 135 Ill. 482.) It is also further defined as where “a person obtains the legal title to property by virtue of a confidential relation and influence, under such circumstances that he ought not, according to the rule of equity and good conscience as administered in chancery, to hold and enjoy the beneficial interests of the property, courts of equity, in order to administer complete justice between the parties, will raise a trust, by construction, out of such circumstances or relations,-and this trust they will fasten upon the conscience of the offending party and will convert him into a trustee of the legal title, and order him to hold it, or execute the trust in such manner as to protect the rights of the defrauded party and promote the safety and interests of society.” (Perry on Trusts, sec. 166.) This rule has been by this conrt quoted with approval in the cases of Beach v. Dyer, 93 Ill. 295, and Allen v. Jackson, 122 id. 567.

As a general rule, one of two elements is necessary on which to base or establish a constructive trust. There must be some element of fraud, either positive or constructive, which existed at the time of the transaction and which influenced the cestui que trust, or there must exist a confidential relation and influence, by virtue of which one has obtained the legal title to property which he ought not, according to the rules of equity and good conscience, to hold and enjoy. The rule is thus well laid down in Perry on Trusts, (sec. 168,) as follows: “Constructive trusts may be divided into three classes, to be determined according to the circumstances under which they arise: First, trusts that arise from actual fraud practiced by one man upon another. Second, trusts that arise from constructive fraud. In this second class the conduct may not be actually tainted with moral fraud or evil intention, but it may be contrary to spme rule established by public policy, for the protection of society. Thus, a purchase made by a guardian of his ward, or by a trustee of his cestui que trust, or by an attorney of his client, may be in good faith and as beneficial to all parties as any other transaction in life, and yet the inconvenience and danger of allowing contracts to be entered into by parties holding such relations to each other are so great that courts of equity construe such contracts prima facie to be fraudulent, and they construe a trust to arise from them. Third, trusts that arise from some equitable principle independent of the existence of any fraud, as where an estate has been purchased and the consideration money paid but the deed is not taken, equity will raise a trust, by construction, for the purchaser.”

The rule is well established, also, that courts of equity carefully scrutinize contracts between parent and children, by which the property of the parent is conveyed to children. The position and influence of a parent over a child are. so controlling that the transaction should be carefully examined, and sales by child to parent must appear to be fair and reasonable. In this case, plaintiff in error, being the owner of this land and with a family of her own, would not, in reason, have been supposed to make a voluntary sale of it to her father for no consideration whatever. The law would presume, if she desired to dispose of it, she would do so to the best advantage to herself. She could have sold her equity of redemption for $1000. By the advice of her father she declined to do so, and entered into another arrangement whereby he took the title of the land, she receiving nothing except the promise that when her divorce was secured a re-conveyance would be made to her. The trustee’s sale, under which Francis Dapray purchased, practically amounted to a sale, from the plaintiff in error. She voluntarily, upon the advice of her counsel, permitted the interest to become delinquent so this foreclosure might occur, and it was with her approval the land was sold under the trust deed. Where, under such circumstances, a convejmnce of property is made from or by the direction of a child to a parent for a consideration much less than its true value, a court of equity will carefully scrutinize the transaction, and ascertain whether or not the parent, by reason of his relation and influence and the confidence reposed in him by the child, has not procured an undue advantage.

The cases of Perry v. McHenry, 18 Ill. 227, and Stephenson v. Thompson, id. 186, are not analogous to this, nor do they come within the rule as heretofore stated in Perry on Trusts and sanctioned by this court. The rule is well settled in this State that a verbal agreement to purchase land for the benefit of another is void under the Statute of Frauds, and cannot be enforced against a purchaser who, in the absence of fraud, has paid for the land with his own money and taken a conveyance in his own name. Such is the rule where no fiduciary relation exists, or no confidential relation, such as that of parent and child. In both the cases last above cited the purchaser of the land (the party against whom it was sought to establish a trust) occupied no such relation to the party seeking relief, but at the instigation and request of such party had taken title to the lands and furnished the purchase money thereof. The rule is well stated in Lantry v. Lantry, 51 Ill. 458, as follows (p. 465): “If A voluntarily conveys land to B, the latter having taken no measures to procure the conveyance, but accepting it and verbally promising to hold the property in trust for C, the case falls within the statute, and chancery will not enforce the parol promise. But if A was intending to convey the land directly to C, and B interposed and advised A not to convey directly to C but to convey to him, promising, if A would do so, he, B, would hold the land in trust for C, chancery will lend its aid to enforce the trust, upon the ground that B obtained the title by fraud and imposition upon A. The distinction may seem nice, but it is well established. In the one case B has had no agency in procuring the conveyance to himself; in the other he has had an active and fraudulent agency.” In this case plaintiff in error was about to dispose of her equity of redemption to other parties, when she was advised by her father not to do so and that he would furnish the money to buy it in. In addition, there also existed the fiduciary relation of parent and child, and the trust and confidence which the law presumes the latter reposed in the former.

Counsel for defendants in error rely upon the case of Davis v. Stambaugh, 163 Ill. 557. In that .case we held that the evidence did not show a constructive trust, and that the mere refusal of a trustee to execute an express trust, or the denial of the existence of a trust by the trustee, does not constitute such fraud as takes the case out of the statute. What is further said in that "case is not in conflict with the views herein expressed, that as between parent and child, or those occupjing a position of trust or confidence, the fraud may be constructive, and may be shown by such facts and circumstances as demand equitable relief. Moreover, in this case it is not apparent why the plaintiff in error should not have the relief asked for in her bill. She is re-invested with the title of her land, and the defendant in error Francis Dapray is re-paid all moneys expended by him, with interest, after deducting amounts received.

As to the agreement introduced in evidence providing for a deed from Dapray to his daughter, executed in 1888, we do not consider it material, except in so far as it tends to corroborate the evidence of plaintiff in error that the land was purchased for her, and refutes the assertion made by Dapray that he bought it for her children, and for no other purpose. The endorsement on the first rental note is also corroborative of the fact that he recognized she had some interest in this land after the conveyance to him.

Taking the record as a whole, we hold it presents a case clearly within the exception to the Statute of Frauds. The entire transaction, and the confidential relations existing* between the parties, create a constructive trust in favor of plaintiff in error.

Objections are made by plaintiff in error to the amount charged against her by the master in stating the account, for different sums of money allowed the father in connection with her divorce case ancj. other litigation affecting the land in Missouri. We are not inclined, from our view of this case, to disturb the account as reported by the master. It was error, however, for the circuit court to dismiss the bill of plaintiff in error for want of equity.

The decree will be reversed and the cause remanded to the circuit court of Macon county, with directions to enter a decree sustaining the material allegations of complainant’s bill, and finding that the defendants in error hold the land in question in trust for plaintiff in error, Eugenie Pope, and that a conveyance thereof be made to her upon the payment of the amount found due by the master, together with legal interest from the date of such report.

Reversed and remanded.